Chronicle's strategy shift starts to pay off

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Copies of the San Francisco Chronicle are displayed at a newsstand Monday in San Francisco. A report by the Audit Bureau of Circulations reveals that the average daily circulation of U.S. newspapers fell 10.6 percent in the six month period between April-September compared to one year ago. The San Francisco Chronicle had the largest decline with a drop of 25.8 percent to 251,782. less

Copies of the San Francisco Chronicle are displayed at a newsstand Monday in San Francisco. A report by the Audit Bureau of Circulations reveals that the average daily circulation of U.S. newspapers fell 10.6 ... more

Photo: Justin Sullivan, Getty Images

Photo: Justin Sullivan, Getty Images

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Copies of the San Francisco Chronicle are displayed at a newsstand Monday in San Francisco. A report by the Audit Bureau of Circulations reveals that the average daily circulation of U.S. newspapers fell 10.6 percent in the six month period between April-September compared to one year ago. The San Francisco Chronicle had the largest decline with a drop of 25.8 percent to 251,782. less

Copies of the San Francisco Chronicle are displayed at a newsstand Monday in San Francisco. A report by the Audit Bureau of Circulations reveals that the average daily circulation of U.S. newspapers fell 10.6 ... more

Photo: Justin Sullivan, Getty Images

Chronicle's strategy shift starts to pay off

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The Chronicle said Monday that reshaping the newspaper's business model is paying off financially even though, as anticipated, it has resulted in a sharp decline in circulation.

For the six months that ended in September, The Chronicle's daily circulation dropped 25.8 percent to 251,782, compared with the same period in 2008, the steepest decline among major U.S. metropolitan papers.

Data released Monday by the Audit Bureau of Circulations, which tracks newspaper readership, showed significant circulation declines at papers throughout the country, with the average paper losing more than 10 percent.

Frank Vega, publisher of The Chronicle, said the newspaper's loss in circulation was an expected result of moving away from a business model that depends mainly on advertising and instead relies on readers for a greater share of revenue.

The Chronicle's weekly subscription rate has jumped from $4.75 18 months ago to $7.75 now. At the same time, the paper has offered fewer subscription discounts and stopped home delivery in places where it no longer makes economic sense.

Profiting some weeks

Because of those changes, Vega said The Chronicle is now turning a profit some weeks after years of significant financial losses, including more than $50 million last year.

"We feel the readers have to make a conscious decision about the paper," Vega said. "And we're pleased that we still have the healthiest audience for any media outlet in the Bay Area."

Vega noted that the paper's online readership continues to grow. Combined, The Chronicle and SFGate.com reach about 1.9 million people in the Bay Area in a typical week. That's down 3.8 percent from this time last year because of the decline in print circulation. Despite the drop, The Chronicle remains the Bay Area's largest newspaper.

Starting next month, the paper will become the first in the country to use glossy, magazine-style paper in its daily editions, although not for every page. In addition, the paper plans to launch a new arts and culture section, called Ovations, next week.

"If we didn't have improving economics, we wouldn't be able to do that," said Chronicle President Mark Adkins.

Other papers slide

Other Bay Area newspapers also have seen their circulations slide. The San Jose Mercury News, for example, lost 10 percent of its daily circulation in the latest Audit Bureau numbers, falling to 200,258.

But Mercury News Publisher Mac Tully said the business environment for his paper, and its sister publications in the Bay Area News Group, has started to improve. The combined online and print audience for the News Group's papers - which include the Contra Costa Times and the Oakland Tribune - is about 2.8 million, Tully said. That's the number that the company pitches to potential advertisers, he said.

"We feel like we may have bounced off the bottom," Tully said. "I really do think we're heading toward a recovery. It's not going to be what it was, but I really think there's going to be a good future."

Almost all media - not just newspapers - have been hit by the plunge in ad revenue. The drop has been caused by a combination of the recession and retail mergers and acquisitions that have reduced the number of advertisers.

Total ad spending in the United States dropped more than 14 percent during the first six months of this year, according to TNS Media Intelligence, which compiles advertising data. Ad spending on television fell 10 percent, magazines lost 20.9 percent, newspapers 24.2 percent and radio 24.6 percent.

Internet display ad spending, in contrast, rose 6.5 percent.

Varied business models

The turmoil in the newspaper industry has forced many papers to try out different business models, including raising subscription rates, publishing only on certain days of the week, and charging for online content. So far, there isn't a firm consensus on which path to take. For all the talk about online subscriptions, for example, most papers still won't make that leap.

"What's striking to me is that a lot of newspapers are talking about doing it, but few have actually done it," said Bill Grueskin, academic dean for the Columbia University Graduate School of Journalism. "At some point, you either do it or you don't."

Bay Area newspaper circulation, online readership

The Chronicle still has the largest circulation of any Bay Area newspaper, as well as the largest combined print and online audience.

Paper

Daily circulation

One-week audience, print and online

The Chronicle

251,782

1,896,595

San Jose Mercury News

200,258

1,120,161

Contra Costa Times

174,852

724,536

Oakland Tribune

92,794

254,061

San Rosa Press Democrat

64,237

353,959

Marin Independent Journal

26,548

161,671

Source: Audit Bureau of Circulations, Scarborough Research, Chronicle research Note: The San Francisco Examiner is not audited by the Audit Bureau of Circulations.